Last Friday, March 16, President Barack Obama may have quietly placed the United States on a war preparedness footing, perhaps in anticipation of an outbreak of war between Israel, the West, and Iran. A newly-propounded Executive Order, titled “National Defense Resources Preparedness,” renews and updates the president’s power to take control of all civil energy supplies, including oil and natural gas, control and restrict all civil transportation, which is almost 97 percent dependent upon oil; and even provides the option to re-enable a draft in order to achieve both the military and non-military demands of the country, according to a simple reading of the text. The Executive Order was published on the White House website.
The timing of the Order — with little fanfare — could not be explained. Opinions among the very first bloggers on the purpose of the unexpected Executive Order run the gamut from the confused to the absurd. None focus on the obvious sudden need for such a pronouncement: oil and its potential for imminent interruption.
If Iran was struck by Israel or the West, or if Iran thought it might be struck, the Tehran regime has promised it would block the Strait of Hormuz, which would obstruct some 40 percent of the world’s seaborne oil, some twenty percent of the global supply, and about 20 percent of America’s daily needs. Moreover, Tehran has promised military retaliation against any nation it feels has harmed it. The United States is at the top of the list.
Blocking the Strait of Hormuz would create an international and economic calamity of unprecedented severity. Here are the crude realities. America uses approximately 19 to 20 million barrels of oil per day, almost half of which is imported. If we lose just 1 million barrels per day, or suffer the type of damage sustained from Hurricane Katrina, our government will open the Strategic Petroleum Reserve (SPR), which offers a mere six- to eight-week supply of unrefined crude oil. If we lose 1.5 million barrels per day, or approximately 7.5 percent, we will ask our allies in the 28-member International Energy Agency to open their SPRs and otherwise assist. If we lose 2 million barrels per day, or 10 percent, for a protracted period, government crisis monitors say the chaos will be so catastrophic, they cannot even model it. One government oil crisis source recently told me: “We cannot put a price tag on it. If it happens, just cash in your 401(k).”
Since 2007, when the prospect of Iran blocking the Strait of Hormuz became a daily threat enunciated by Iran, our local, state, and federal governments at all levels have been criticized for having no specific plan in the event an oil interruption occurred. The National Defense Resources Preparedness executive order appears to be the first step toward developing a potentially vast, far-sweeping plan that could reach into every garage and grocery store shelf. Government experts who watch the day-to-day ebb and flow of oil stocks were surprised at the sudden move. One quipped, “If this is true, it would be such a departure in policy, I can scarcely believe it.”
The March 16 Executive Order is based on the Defense Production Act of 1950, as amended (50 U.S.C. App. 2061 et seq.), and Section 301 of Title 3 of the United States Code, and reads as a near-verbatim restatement of President Bill Clinton’s 1994 Executive Order 12919, and several other orders of prior presidents. No specific plan was every outlined based any of the enabling Executive Orders.
Obama’s Order sets forth as its rationale that “the United States must have an industrial and technological base capable of meeting national defense requirements and capable of contributing to the technological superiority of its national defense equipment in peacetime and in times of national emergency.” It goes on in Section 103 C to authorize the President, “in the event of a potential threat to the security of the United States, to take actions necessary to ensure the availability of adequate resources and production capability, including services and critical technology, for national defense requirements.” The task of advising is assigned, in Section 104 to “the National Security Council and Homeland Security Council, in conjunction with the National Economic Council,” which “shall make recommendations to the President on the use of authorities under the Act.”
Those bodies will relegate their tasks to various secretaries of the Cabinet, specifically, the Secretary of Agriculture with respect to food resources; the Secretary of Energy with respect to all forms of energy; the Secretary of Health and Human Services with respect to health resources; the Secretary of Transportation with respect to all forms of civil transportation; the Secretary of Defense with respect to water resources; and the Secretary of Commerce with respect to all other materials, services, and facilities, including construction materials. Each of these Secretaries, according to Section 201, entitled, “Priorities and Allocations Authorities,” will be empowered, subject to the President and his advisers, to “analyze potential effects of national emergencies on actual production capability, taking into account the entire production system, including shortages of resources, and develop recommended preparedness measures to strengthen capabilities for production increases in national emergencies.” Their recommendations can, if need be, “control the general distribution of any material (including applicable services) in the civilian market.”
In subsection D, the Order states, “If agreement cannot be reached between two such Secretaries, then the issue shall be referred to the President through the Assistant to the President and National Security Advisor and the Assistant to the President for Homeland Security and Counterterrorism.” Hence, any arguments between Cabinet members is anticipated and dealt with.
The President, under the Order, will be empowered to order the “military use of civil transportation.” If implemented, the Secretary of Energy could rule “with respect to energy production and construction, distribution and use, and directly related activities,” in order to achieve “civil defense and continuity of Government.”
Sec. 203 is entitled “Maximizing Domestic Energy Supplies.” It delegates to the Secretary of Energy “the authority to make findings that materials (including equipment), services, and facilities are critical and essential.”
Sec. 204 is entitled “Chemical and Biological Warfare.” It ambiguously delegates “the authority of the President … to the Secretary of Defense.”
Part III of the Executive Order empowers the President and his advisers to effect “the expansion of productive capacity and supply.” This includes, “Loan Guarantees to reduce current or projected shortfalls of resources, critical technology items, or materials essential for the national defense.” Any Federal Reserve Bank is directed to “assist the agency in serving as fiscal agent.”
Section 303 allows the government to “enable rapid transition of emerging technologies,” that is, demand that certain needed technologies now kept out of the market be accelerated into the market. This could include alternative fuel vehicles which would relieve the approximate 67 percent of every oil barrel that goes to transportation. The same section allows the National Defense Stockpile to take control of strategic materials “if such transfers are in the public interest.” Indeed, under Section 306, entitled “Strategic and Critical Materials,” the Secretary of Defense and the Secretary of the Interior, in consultation with the Secretary of Defense as the National Defense Stockpile Manager, are each delegated the authority of the President … to encourage the exploration, development, and mining of strategic and critical materials and other materials.” This includes oil and natural gas. In Section 307, entitled “Substitutes,” the national security team is empowered to “make provision for the development of substitutes for strategic and critical materials, critical components, critical technology items, and other resources to aid the national defense.” The term “Substitutes” refers to alternative and synthetic fuels, from algae to hydrogen — many of which are now in advance development.
In the event of an emergency, the Order would empower, “the head of each agency engaged in procurement for the national defense” to “procure and install additional equipment, facilities, processes, or improvements to plants, factories, and other industrial facilities owned by the Federal Government and to procure and install Government-owned equipment in plants, factories, or other industrial facilities owned by private persons.”
Stockpiling or prioritizing will not require a state of war. In Section 310 entitled, “Critical Items,” the government is empowered “to take appropriate action to ensure that critical components, critical technology items, essential materials, and industrial resources are available from reliable sources when needed to meet defense requirements during peacetime, graduated mobilization, and national emergency. Appropriate action may include restricting contract solicitations to reliable sources, restricting contract solicitations to domestic sources (pursuant to statutory authority), stockpiling critical components, and developing substitutes for critical components or critical technology items.”
Part VI is entitled “Labor Requirements,” and directs the Secretary of Labor “to collect and maintain data necessary to make a continuing appraisal of the Nation’s workforce needs for purposes of national defense. In subsection 2, the Order brings up the non-dormant Draft. It mandates that the Secretary of Labor “upon request by the Director of Selective Service, and in coordination with the Secretary of Defense, assist the Director of Selective Service in development of policies regulating the induction and deferment of persons for duty in the armed services.” The Order adds that the Secretary “upon request from the head of an agency with authority under this order, consult with that agency with respect … to making the exercise of priority and allocations functions consistent with effective utilization and distribution of labor.” It goes on to empower “the head of an agency with authority under this order [to] formulate plans, programs, and policies for meeting the labor requirements of actions to be taken for national defense purposes; and estimate training needs to help address national defense requirements and promote necessary and appropriate training programs.”
In defining the civil transportation, the Order covers any possible gasoline rationing and vehicle restriction for vehicles that guzzle too much gasoline. The Order specifies “Civil transportation includes movement of persons and property by all modes of transportation in interstate, intrastate, or foreign commerce within the United States, its territories and possessions, and the District of Columbia, and related public storage and warehousing, ports, services, equipment and facilities. It adds, “Civil transportation” also shall include direction, control, and coordination of civil transportation capacity regardless of ownership” other than “petroleum and gas pipelines, and coal slurry pipelines used only to supply energy production facilities directly.” Gasoline rationing and vehicle restriction for poor mileage cars and trucks is a concept already enshrined in the protocols of the Paris-based International Energy Agency. The United States is a member and has signed the treaty that covers such potential restrictions in the event of an oil interruption.
To avoid any doubt, the Order covers “all forms of energy including petroleum, gas (both natural and manufactured), electricity, solid fuels (including all forms of coal, coke, coal chemicals, coal liquification, and coal gasification), solar, wind, other types of renewable energy, atomic energy, and the production, conservation, use, control, and distribution (including pipelines) of all of these forms of energy.”
Because any oil interruption would have an immediate impact on the distribution of food, the Order also covers “the production or preparation for market use of food resources.” The Order asserts that “food resources” means all commodities and products … capable of being ingested by either human beings or animals.”
The Order explains that “‘Special priorities assistance’ means action by resource departments to assist with expediting deliveries, placing rated orders, locating suppliers, resolving production or delivery conflicts between various rated orders, addressing problems that arise in the fulfillment of a rated order or other action authorized by a delegated agency, and determining the validity of rated orders.” In other words, the control of food and strategic materials, including oil, will be under federal purview, should an emergency occur and the Order invoked.
At press time, administration sources could not be reached to elaborate on the timing of what many see as a year’s overdue preparation for an oil interruption. Such an interruption and its disastrous consequence have been threatened for years. In short, for many years there has been no plan. But now apparently, the legal authority to organize a specific plan has been renewed and updated in crystal clarity.
Edwin Black is the New York Times best-selling investigative author of IBM and the Holocaust, Internal Combustion, British Petroleum and the Redline Agreement, and The Plan: How to Save America When the Oil Stops — or the Day Before (Dialog Press), from which this article is adapted. More information about The Plan can be found at www.planforoilcrisis.com.